The importance of business insurance: Always expect, and plan for, the unexpected
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The looting and destruction seen in KwaZulu Natal and Gauteng this month has left many businesses destroyed or badly damaged, some beyond the point of recovery.
Some large companies may have special risk insurance with the South African Special Risks Insurance Association (Sasria), the only state-owned non-life insurance company that provides voluntary cover against unique risks including civil commotion, public disorder, strikes and riots.
And while Sasria predicts that the pay-outs they will have to make over the coming months will be the highest in its 42-year history, they have undertaken that all legitimate claims by business and homeowners will be met.
The question is, how many businesses affected by the recent protest action have insurance cover, specifically Sasria cover? The bottom line is that many businesses affected don’t have insurance cover and they will not be able to recover from the damage and losses incurred.
The South African Insurance Association (SAIA), the representative body of the non-life insurance industry including Sasria, has urged all insurance policy holders, including both large and small businesses, who have suffered losses or damage to property and or business operations, to reach out to their respective insurance companies or brokers and registered financial intermediaries or planners for assistance.
While this devastating situation will come to an end, and insurers and the greater business fraternity will work together to get business back on their feet as quickly as possible, this situation has also highlighted the importance of insurance for small business.
Working for yourself has many pros as well as many risks. While some might view business insurance as an additional expense, insurance should rather be viewed as a prerequisite expense for any business.
Many business owners work so hard to get a business up and running and having the right small business insurance cover is important to safeguard your business, should an unfortunate event occur.
Before the current surge in violence and unrest, the Covid-19 pandemic and subsequent lockdown resulted in small businesses being very hard hit. Many business owners may have thought that a global pandemic, or provincial rioting of such enormous scale, might only be a once-off event, the reality is that an emergency or catastrophe can happen at any time.
There are many options to consider when looking at adequate business insurance, based on the type of cover you need and the size of your business. Getting appropriate cover is essential, to make sure that you are not under or over-covered, and that you have peace of mind should your business be affected by theft, fire, floods, storms or accidents. Small businesses can also take out insurance against legal action, business interruption, as well as reputational damage.
While the options may seem overwhelming, speaking to an authorised financial planner or advisor, can help to assess the type of insurance that your business may need. Always remember to read the small print when to comes to signing an insurance policy, and to make sure that you know what you are, and what you are not, covered for, including damage and theft caused by public rioting.
If the last 18 months has taught us anything, it is to expect, and plan for, the unexpected.